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We all have specialties where we make money with our business owner clients.  I find that when one works with private business owners it’s helpful to have a broad knowledge on many subjects.  If this broad knowledge is not your specialty, it’s important to know whom you can call on behalf of your client if they show interest in the subject you’re talking about.

Some of these subjects are crucially important to business owners and others are just things they will be interested in and want to know more about.  I think understanding what is crucial versus just interesting will help you know how much time you should spend becoming knowledgeable in these different areas.

Qualified Retirement Plans – Most private business owners will not be able to leave their business without having a significant amount of assets in their qualified plans.  Smaller businesses are good candidates for more complicated plans and larger businesses will look at qualified plans as only an employee benefit with limited interest for the company owner.

You will want to at least be able to talk about plans such as SIMPLE plans, standard 401(k) plans, safe harbor 401(k) plans, cross tested profit sharing plans, cash balance plans and hybrid defined contribution – defined benefit plans.

Medical Insurance – Medical insurance is becoming a real problem for many private businesses.   Advanced knowledge in medical plans becomes useful when the company must stop using community rated plans and go with company rated plans.

When this happens, it’s useful to have an understanding of partially self-funded plans and 831(b) captive insurance plans along with a partially self-funded plan.  I encourage you to have a good medical insurance broker who understands plans that range from fully insured all of the way through partially self-funded plans with a captive insurance arrangement.

Employee Stock Ownership Plans - If your business owner client is interested in leaving their business they will always want to at least hear about ESOP plans and how they can be used in their company.  Business owners we work with have heard good and bad things about ESOP’s.  If you can help them understand the basics you will be able to guide them towards or away from an ESOP.

I like the ESOP conversation because it allows me to move towards business relationship management as well as open book management.  I find both are usually more important than the ESOP conversation, although this conversation almost always starts with ESOP’s and then moves towards other topics.

Captive Insurance Companies - If your client has a business that has regular profits of over $1,000,000 per year and has over 100 employees your client probably has probably heard about captive insurance companies and is curious as to whether they make any sense for them.  In the right circumstance a captive can provide a large variety of benefits for the business and it’s owners.

I find that very few companies will actually install a captive, but as with the ESOP, having a captive conversation often allows you to move into complicated business and estate planning conversations.  It’s important for you to remember that your clients hate complexity, which means that keeping it simple is very important.

As you build your general knowledge around business strategies you’ll find that it’s easier to engage your business owner clients in meaningful conversations.  I would love to hear what sort of conversations you’re having with your clients where you must bring in other advisors.

Josh Patrick

I’ve put together a special report on the 7 Myths That Advisors Have With Private Business Owners.  I recommend that if you’re an advisor you click on the button below to download our special report.  After you read the report, please let me know what you think.


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Topics: 401 (k) plans, ESOP, 831(b) captive insurance company, medical insurance, captive insurance

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